ROME - Italian President Giorgio Napolitano on Monday asked Florence Mayor Matteo Renzi to form the country's 63rd government in 68 years.

The 39-year-old Renzi emerged as the victor in a short-but-bitter power struggle against Enrico Letta, a member of Renzi's own political party who stepped down as prime minister Friday.

In his first remarks after meeting with Napolitano, Renzi set out an ambitious set of goals for the coming months, including a new set of electoral rules by the end of this month and a labor reform package by the end of this month. He'll tackle a reform of the public administration in April and finance and revenue reform by May.

But first, Renzi, who will become Italy's youngest prime minister ever, will have a series of challenges ahead of him: He will have to cobble together a majority coalition in parliament, select a cabinet and face a parliamentary confidence vote before embarking on the reform-minded game plan he has his sights set on. Renzi said he'll start consultations toward forming the new government on Tuesday.

In his remarks, Renzi said he understands the "urgency" of the moment, but that he will take as much time as needed to form a new government to be sure it would be stable with the right people in the right posts.

Financial markets at first reacted cautiously when it became clear Letta would be forced out. But with a seemingly clean transition in the cards, markets rallied Monday, with the yield on Italy's benchmark ten-year bonds falling to their lowest levels in eight years Monday, and the blue chip index on the Italian Stock Exchange in Milan showing gains in heavy trading.

But it remains uncertain how long Renzi's honeymoon period will last. The gregarious Tuscan has never been elected to an office higher than as mayor of Italy's ninth-largest city, and worries about his inexperience at a national level could emerge if he does not hot the ground running.

"Italians are eager to see some good news in the economy and if it doesn't come soon, this enthusiasm for Renzi could evaporate quickly," said Maria Rossi, co-director of the Rome-based polling firm Opinioni.

Gian Franco Gallo, a political affairs expert with Hildebrandt and Ferrar in Milan, said Renzi is right to move quickly.

"He showed he was a man of action in his battle against Letta, and he has to do the same when he becomes prime minister," Gallo said.

Italians said they are hopeful Renzi will be effective where other recent governments - led by Letta, technocrat Mario Monti, and controversial billionaire tycoon Silvio Berlusconi - were ineffective.

"I think Renzi is a natural leader and I just hope he can get the government to take steps to improve the situation we're all in," said Nello Casagrande, a 50-year-old truck driver. "I think he at least understands how much regular people are suffering."

Sandra Del Grecco, a 23-year-old dog walker agreed: "It is good to see regular people hopeful about politics," she said. "I hope that can translate into new change."